Apple new subscription rules now upsetting developers, too

Some developers are being frustrated by Apple's strict rules regarding access …

While some publishers have bemoaned Apple's new rules regarding subscription based content, certain developers are starting to feel the pinch as well. Arc90, developer of the Readability Web service, has taken Apple to task for rejecting Readability's native iOS client on the grounds that it doesn't abide by the new subscription rules. Keyone Productions, maker of TinyGrab, has also decided to not even finish developing its iOS app, claiming Apple's rules are so confounding that it is impossible for the company to make an "acceptable" app.

Arc90's Rich Ziade wrote an "open letter" to Apple after receiving a rejection notice for Readability. The Readability service works via a bit of JavaScript code that reformats Web pages into an easy-to-read format that strips out ads and other elements not related to the main text. The company recently launched a web-based subscription service in which 70 percent of the money collected is paid to site publishers based on the content that its subscribers read—ostensibly paying those publishers for lost ad revenue. Readability keeps the remaining 30 percent.

Ziade complained that Apple's wording of its rules includes not just apps that offer content, but also "functionality or services." From Apple's point of view, Readability is offering a paid service without offering a method to pay for that service within the app itself using the in-app purchasing APIs, and for that reason rejected the app.

However, according to Ziade, "if we implemented In App purchasing, your 30 percent cut drastically undermines a key premise of how Readability works"—namely that 70 percent of the revenue goes to writers and publishers.

Ziade's complaint is a bit disingenuous, since Arc90 is keeping a 30 percent cut for itself for essentially reformatting websites and removing ads. But Readability's model is unique in that it does offer readers a way to "pay" for the content they read more or less on a per-article basis. Giving Apple a 30 percent cut of the total revenue means Arc90 would either have to forgo its own cut or renegotiate terms with publishers.

Arc90 will instead focus its efforts on web-based clients for the time being. Should Apple relent on its intent to take a 30 percent cut of all content or services accessed by iOS apps, it will resume iOS development.

In a similar vein, TinyGrab has decided that it won't offer a native iOS client for its "social screenshot sharing" service. Project Manager Chris Leydon noted in a blog post that the way TinyGrab works would bump up against a number of restrictions regarding implementing in-app purchases, including those that prohibit apps that enable extra functionality except via Apple's APIs or that offer "'rental' content or services that expire after a limited time."

TinyGrab works by offering a free app that accesses a web service which can be upgraded to a "premium" service by paying a subscription fee. The free version of the app offers limited functionality; while Apple's subscription rules allow providers to offer a way to pay for services directly, enabling the additional features for its "premium" service would violate the rule pertaining to in-app purchases in general. And if the premium features only last for the "limited time" of a subscription term, it violates yet another rule.

This conundrum of rule violations could affect other similar services, such as Dropbox. The file-sharing service currently offer users a free app that lets users access files saved to their online Dropbox storage. Users get 2GB of space for free, but can "buy" more space by paying monthly or yearly fees. That could be construed as offering additional extra functionality for a "limited time." The same could be said for Hulu Plus or Netflix apps, which only allow access to content for a "limited time" as long as the subscription fee is paid.

According to Leydon, the rules simply put any service that includes a web-based component with access limited by a subscription in jeopardy of having a native iOS client rejected, or at best left in a very nebulous gray area.

"Apple would now like a slice of our pie, which is fair enough," Leydon wrote. "We're more than willing to give Apple a cut of the sales that they assist in, but we can't—they simply won’t let us."

Apple's new rules may have caught a number of developers off guard, so some of the frustration is understandable. If the business model didn't account for giving Apple a 30 percent cut of the gross revenue, it can certainly play havoc with how services are priced or how they are implemented. If Apple plans to stick to its guns and effectively demand a 30 percent cut of all revenue generated by iOS apps, then content and service providers need to factor that into their business plans.

However, it seems that the collective restrictions and 30 percent cut are putting a squeeze on a number of legitimate business models just as they are beginning to take root. It may behoove Apple to reconsider its stance on the revenue split—unlike iTunes content, apps and iBooks, in-app purchases are actually hosted by developers themselves, not by Apple, so the "just covering our costs" justification doesn't quite hold here. And, it would also be beneficial if Apple could more clearly communicate how publishers and content providers can implement in-app purchasing for subscription-based premium services.

The alternative—content or service providers end up ignoring the iOS platform—is not a pleasant one to consider.